Cryptocurrency scam: Cop could have aided Rs 500 crore scam

Police official under scanner for Flintstone Group scam busted by Thane Crime Branch on Monday; main accused, a school dropout, on the run.

The Thane Crime Branch, which busted a cryptocurrency scam worth Rs 500 crore on Monday, has learned about the role of an assistant police inspector (API) from Thane. While the police suspect that the main accused Amit Madanlal Lakhanpal is on the run and could have fl ed to Dubai, Dighambar Jangale, an API attached with the Thane police, acted as an agent. Jangle’s role is currently under scanner.

On the complaint of one Pravin Agarwal from Delhi, the Thane Crime Branch had registered an offence against Lakhanpal, managing director of Flintstone Group, who had last year launched his own cryptocurrency called Money Trade Coin (MTC). “MTC initially launched around 105 million coins and was to launch an additional 20 million coins. The launch function was held in July 2017 in Dubai, with several celebrities and royal family members of Dubai in attendance,” said a police official from the Thane Crime Branch. Later, Lakhanpal invited several celebrities for company-led events and opened offices in Thane and Vikhroli from where he operated.

“Just like an Initial Public Offering (IPO), Lakhanpal had offered a Private Initial Coin Offering (PICO), wherein he invited people and offered coins for just $ 3 each,” said Parambir Singh, Thane Police Commissioner. “Later, he hiked the value of one coin to $ 6,000, but nobody could encash their stock as MTC was never listed on the crypto market. Forbes Middle East even published an article on Lakhanpal and MTC, with Lakhanpal popularising himself by writing a book on cryptocurrency, titled ‘The World of Crypto Currency’,” said Singh.

During searches at Flintstone Group offices, the Thane Crime Branch seized around 53 laptops. “We have found photos of Lakhanpal with several celebrities and cricketers. Role of API Jangale is also being investigated in the matter,” said Singh.

According to the police, MTC had lured as many as 25,000 people to invest a total of about Rs 500 crore. Based on blockchain technology, the company promised an ultra-secure wallet that needed multi-level verifications, a reason why thousands of people trusted it. The application was developed by a Mumbra-based person Taha Hafiz Qazi who is at present under arrest.

“To further gain public confidence, Lakhanpal used to show a fake fixed deposit (FD) certificate of Rs 250 crore of a private bank. He also showed Standby Credit Letters worth Rs 1,750 crore from other banks and claimed that he was a degree holder from Auckland University in New Zealand and a PhD. In reality, he dropped out of a school in Airoli after Class VIII,” said a police official.

Cryptocurrency is not recognised as legal tender in India, although 200 other countries use it to varying degrees. There are over 100 kinds of cryptocurrencies in circulation, including Bitcoin, Ethereum, Ripple and Cardano; Bitcoin is the most popular among them.

In April this year, in a major blow to virtual currency transactions in the country, Reserve Bank of India (RBI) has asked all the regulated entities, including banks, to not provide services to any individual or businesses dealing in digital currencies. RBI gave banks three months to end all existing relationships with virtual currency players. However, the central bank, in an interesting move, also said it is keen on floating its own cryptocurrency. Interestingly, Union finance minister Arun Jaitley, in his budget speech, said that digital currencies can’t be recognised as legal tender.